Israeli backup bank accounts in demand again

In a survey released earlier this year before the COVID-19 outbreak by the US Anti-Defamation League (ADL), about two-thirds of American Jews say they feel less safe than at any other time in the past decade. The ADL survey also found that more than half of American Jews (54%) have either experienced or witnessed an incident they believe was motivated by antisemitism. “Our tracking has shown that lethal and nonlethal antisemitic attacks have been on the rise in recent years, and now we’ve also found that American Jews are deeply concerned for their personal safety and their families’ and communities’ security in a way that they haven’t been in more than a decade,” said Jonathan A. Greenblatt, ADL CEO and national director. “It is a sad state of affairs that in the face of widespread anxiety about antisemitic attacks, some Jewish Americans are modifying their routines and avoiding public displays of Judaism to minimize the risk of being targeted,” he added.In the past, some American Jews had held bank accounts in Israel. Their purpose was typically to support family members who had immigrated, to deal with cash-flow and expenses related to real-estate owned in Israel, and in a few cases – in order to keep some cash aside for a “rainy day.” However, very few of those Jews actually envisaged a scenario where they would need to flee the US and seek safety in Israel in the future. For good reason, they felt very safe and comfortable as Jews living in America.As we can clearly see from the recent ADL survey, and other similar ones, this long-standing sense of security has increasingly come under attack. In addition, COVID-19 has had a significant impact on city life in general, and Jewish community life in particular, leading people to further question the way in which they live their lives. The majority of Jews live in cities or around them.As a wealth manager with offices both in New York and Tel Aviv, we have received an increasing number of calls in recent months from American Jews who are considering opening an account in Israel. Given increased social instability, rising antisemitism and the pandemic situation in the US, wealthy individuals or families are now incorporating an Israeli backup account as part of their wealth risk management strategy. For a family with significant wealth, it could make sense to set aside a few million dollars (in some cases, more) to deal with the risk, in the still apparently unlikely event that they would need, or want, to leave the US at short notice. “Better safe than sorry.”In recent years, as international tax reporting, anti-money laundering and investment advisory regimes have tightened significantly, it has become difficult for foreign residents to maintain bank accounts in Israel – and significantly fewer accounts have been opened. Israeli banks have become concerned that money placed in the accounts was not reported to the US tax authorities and they started to enforce US investment advisory law: investment accounts of US residents can only be managed by investment advisers that are registered and supervised by the US Securities and Exchange Commission. This is all for the better as it is creating a sounder foundation for what now seems as a potential new wave of interest in backup accounts in Israel.

The writer is chief investment officer of Clarity Capital.
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